It’s been quite a week. I was finally able to write about a VC round closing in Colombia. A local VC actually closed a $1.3M series A round with social gaming company, Zio Studios, based in Colombia. This has been the talk of the town down here since VC investing is pretty non-existent here (although, private equity investing is pretty well-established). It’s really another example of how things are changing making geography less of an obstacle and more of a choice of life.
Last week, I also wrote in a local portal called KienyKe about the stuff going on in the Middle East with the toppling of Mubarak in Egypt and the turmoil in the other countries. In this new world we’re living in, if entrepreneurs aren’t connected to other world-class entrepreneurs and investors, it’s almost becoming a matter of choice. As I said, geography is becoming less of an obstacle.
Even within the Latin American region, digital strategies that target the whole region used to emanate from countries such as Brazil and Mexico and, on occasion, from Argetina (Mercado Libre) or Chile. Nevertheless, now companies such as PagosOnline with their Latin American Payments (see video) strategy and VivaReal are targeting Latin America all from a headquarters based in Colombia.
Yesterday, during a rainy afternoon in Bogotá, I interviewed the co-founders of Latin American Payments, Jose Velez and Martin Schrimpff, which offers a robust payments platform, anti-fraud system and payments collection all designed specifically for the needs of the Latin American market. The company is PCI certified, have won international prizes for their platform and are already working with clients such as Sony, Amway, Harvard Business Review and Telefonica and are starting to speak with international retailers, gaming companies and travel players among others.
Latin American Payments is a division of PagosOnline, a Colombian start-up with almost 100 employees which counts Buscapé, the large Brazilian comparison shopping site, as it’s majority shareholder (75%). As many know, the South African investment firm, Naspers, bought almost all of Buscapé’s shares for well over US $300M a couple of years back and is busy building it into a Latin American powerhouse (along with it’s satellite companies).
As the pictures below show, there’s quite a bit of hustle and bustle going on right now at Latin American Payments. Jose and Martin are busy complementing an impressive team of developers and business people from top banks and international credit card companies as they go after a Latin American e-commerce market that is surging almost 40% annually to $21.8B.
It might seem strange to offer a Latin American solution from Colombia instead of Mexico or Brazil. Nevertheless, it makes more sense if you consider that, unfortunately, Colombia is one of the most challenging regions for combating credit card and ATM fraud in the world. Several years back, I was talking to a local bank executive who told me that ATM machine makers had to continually innovate in Colombia (some of these innovations found their way into the entire product line) because of the “creativity” with which some Colombians would try to “beat the system.”
Those Colombians are the bane of resourceful and entrepreneurial Colombians like the people at Latin American Payments who are using their ingenuity and hard work to make sure their clients are protected from losses. Incredibly, as happens all around the world, when you are challenged to survive (and thrive) in such hostile circumstances, you come out stronger. That’s one of the reasons that Jose and Martin are so confident about the future.
Nonetheless, there are competitors. Paypal is working to penetrate the market further and local competitors are also developing their own solutions and expand to other countries. Jose and Martin are conscious of this, but believe that 8 years of experience, constant investment in their platform and the ability of clients to collect payments from customers in a variety of ways (overcoming the low credit card penetration in the region) are key assets.
The final asset, they believe, which gives them an edge is the entrepreneurial environment they’ve fomented and the impressive team of young, knowledgeable collaborators they are assembling with the necessary chops to execute on the vision. Finally, (and for disclosure purposes), I the company its sponsorship of the Founder Institute in Colombia (for which I am the director).
The other day, I had a great conversation with Hernan Aracena, co-founder of a startup called Piola offering an web conferencing solution for meetups and events such as virtual barcamps. Lately, he hasn’t spent more than two months at a time in anyone country. He’s been to Madrid, Miami and San Francisco (where he’s living now) going to hackathons and entrepreneurial events.
Piola has gotten quite a bit of use in Latin America from radio stations such as RCN in Colombia as well as organizations that promote startups in the region. The other day, Tim Draper from DFJ, spoke (using Piola) at a Brazil Tech Valley event. Hernan and the Piola team know they were onto something when, in 2009, their first event generated over 5k realtime viewers without much marketing.
After testing his product in Latin America, Hernan is ready to promote it to a more global audience and take his company to the next level. Although he’s lived in Venezuela and Chile, he moved out to the valley because that’s where he feels he has to be to achieve his objectives. He’s already been working with a medical organization and a part of the UN as potential customers.
After hearing Hernan’s story, there are some characteristics that, in my mind, make him a talented entrepreneur:
1. Outlook and energy. From the outset, it’s obvious that Hernan is an extremely positive person as is evidenced by his demeanor (see interview below) and comments.
2. Talent. Hernan likes building and working within a team. He refers to his co-founding team members as “artists” and measures their talent, but also their commitment to the project before bringing them on.
3. Product Development. From the get-go, Piola has iterated its product numerous times working out the kinks and developing an API that helps customers and partners deploy the solution.
4. Customer Development. As the below photos show, Hernan took a road trip throughout Latin America meeting with all kinds of users of the Piola platform. The photos below give a sense of Hernan enjoys his work (check out the last one with Hernan and Tim O’Reilly).
5. Willingness to learn and seek guidance. At a suggestion from his friend, Andres Barreto, he moved over the San Francisco to connect with everything that’s happening in the Valley. The company has been focused on product and customer development, but are now trying to get some help in deciding on a business model that makes sense.
Talking with Hernan, I was kind of reminded of the talk that the CEO of Airbnb gave at Y-Combinator a few months back about their search for a business model and a product/market fit that could take his company to the next level (he’ll also be checking out a session of the local chapter of the Founder Institute this week). If that’s a valid comparison, then I think Hernan and his team have what it takes and believe that we should be hearing interesting news about Piola and Hernan in the near future.
A few months ago, I wrote about “Mover & Shaker” Santiago Pinto, a successful Argentinean Angel investor and entrepreneur who’s backing ad network, Smowtion. I wrote about Santiago and about Smowtion’s success at building its publisher and customer base. Now, Facebook has just announced that they are part of its white list of approved ad networks. While I see tremendous opportunities in targeting the Latin American market and will be talking a bit about this at the SxSW panel in March, I believe that companies such as Smowtion and Brazilian company BT Buckets (mentioned in a vieo in a previous post) are great examples of entrepreneurial teams who think big and tackle global challenges. Yesterday, I was talking to a US journalist about trends in global start-up investing (at least my take) and it’s definitely a reality that top start-up talent knows now geographical boundaries and can be found world-wide. Latin American start-ups and entrepreneurial teams are maturing at an astonishing pace and companies such as Smowtion are leading the way.
It’s been quite a week. I was finally able to write about a VC round closing in Colombia. A local VC actually closed a $1.3M series A round with social gaming company, Zio Studios, based in Colombia. This has been the talk of the town down here since VC investing is pretty non-existent here (although, private equity investing is pretty well-established). It’s really another example of how things are changing making geography less of an obstacle and more of a choice of life.
